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Suppose that you buy a 12x24 FRA contract, that is, the settlement date is exactly a year from now and the maturity date is

Suppose that you buy a 12x24 FRA contract, that is, the settlement date is exactly a year from now and the maturity date is 2 years from now, with a notional principal of 1 million. The rate on the contract is 3%. When settlement day comes, the one-year LIBOR as of fixing date turns out to be 4%. Determine your payoff from this contract.

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